ST. PAUL — The price of driving electric vehicles in Minnesota may well increase as lawmakers look to wrap up work on a transportation funding plan.
The House transportation budget bill raises a yearly surcharge paid by electric vehicle owners from $75 to $200. When the House debated and passed the bill on April 28, Democrats proposed an amendment to limit the increase to $100, but it failed on a 67-67 vote.
The overall bill passed with bipartisan support 85-49.
The Senate transportation budget bill includes an identical increase.
The state originally enacted the $75 annual surcharge in 2021 to replace the money electric vehicle owners would normally pay in gas taxes, which contribute to road and bridge construction and maintenance.
Because EVs use no gasoline, owners don’t pay the per gallon tax paid by drivers of conventional vehicles which is one of the main sources for funding for transportation.
This year House Republicans proposed raising the surcharge as a way to find more revenue for roads and bridges.
Some Democrats said they don’t oppose making EV drivers pay more, but they argued $200 is too much.
Rep. Larry Kraft, DFL- St. Louis Park, who proposed the amendment to put the surcharge at $100 said he hoped it would be viewed as a fairer option.
“I'm hoping this will be viewed as a friendly amendment,” Kraft said. “It gives us the chance to back away from what is a pretty huge and unfair increase in EV annual registration taxes.”
Kraft said with the current 31.8 cent per gallon gas tax, a Minnesotan who drives an average of 13,957 miles per year with an efficient 40 miles per gallon car would pay around $111 per year. He said that electric vehicles tend to drive fewer miles than that per year on average, so a $200 fee would mean electric vehicle owners would likely be paying more than gas vehicle owners.
Rep. Steve Elkins, DFL-Bloomington, said the $200 EV fee would be the third highest in the country. Kraft said such a high fee could discourage people from choosing electric vehicles, which would have a negative impact on the environment.
The transportation bill’s co-sponsor, Rep. Jon Koznick, R-Lakeville, said that Minnesotans want electric vehicle drivers to be paying as much as drivers of gas powered vehicles. While he and the rest of the Republicans in the House voted against the amendment, he joked that he appreciated the effort Democrats were making.
“It's encouraging to see our friends across the aisle suddenly get some tax insight and want to lower taxes and have concerns about being an outlier,” Koznick said. “I wish that would transpire into all areas of taxation.”
Even as the House passed the Republican-sponsored EV tax increase, GOP leaders have presented an anti-tax message.
When asked by reporters how Republicans would craft a state budget with a projected deficit looming in two years, House Speaker Lisa Demuth, R-Cold Spring, repeated the anti-tax message.
"No new tax increases, that's what I can guarantee,” Demuth said at a news conference after Gov. Tim Walz’s State of the State speech on April 23. “That is a non-starter for House Republicans at this point."
Report for Minnesota is a project of the University of Minnesota’s Hubbard School of Journalism and Mass Communication to support local news in all areas of the state.